PRECIOUS-Gold steadies after Friday's slide on lower stock markets

Reuters Staff

3 Min Read

* Stock markets extend recent selloff
* Silver firms after biggest 1-day drop since Dec 2016
* GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl
(Recasts throughout; updates prices, headline; adds comment,
NEW YORK to dateline)
By Renita D. Young and Jan Harvey
NEW YORK/LONDON, Feb 5 (Reuters) - Gold prices steadied on
Monday as a slide in stock markets helped the precious metal
claw back some lost ground after logging its biggest one-day
loss in two months in the previous session.
Prices fell 1.2 percent on Friday after
stronger-than-expected U.S. payrolls data shored up expectations
that a pickup in inflation would spur further U.S. interest rate
hikes this year. That boosted the U.S. dollar, in which gold is
priced.
The greenback rose slightly on Monday, while stock markets
were routed around the globe as resurgent U.S. inflation raised
the possibility that the Federal Reserve would tighten policy
more aggressively than previously expected.
Spot gold steadied at $1,334.40 an ounce by 1:34 p.m.
EST (1834 GMT), still well below late January's 17-month high of
$1,366.07. U.S. gold futures for April delivery settled
down 80 cents, or 0.1 percent, at $1,336.50.
"Gold is going to start to be noticed as an inflation hedge
more so than before, because the stock market seems to be not
just in a selloff, but in a probable profit-taking move," said
George Gero, managing director of RBC Wealth Management in New
York.
U.S. stocks extended their selloff after Friday's drop on
the back of rising bond yields and prospects for increasing
inflation.
"I would expect the recent correction in equity prices to
show a little bit more bid (in gold), but at the moment it
doesn't seem to be the case," said Daniel Ghali, commodities
strategist at TD Securities in Toronto.
"That reinforces the argument that we might see a little
consolidation in gold."
Gero said gold purchases ahead of the Chinese Lunar New Year
in mid-February also supported prices.
Gold normally responds to inflationary signs, but this time,
even with Chinese Lunar New Year and India showing demand, the
recent lower prices are keeping a rally muted, he added.
"Gold may pick up later in the week as equity sellers
allocate more to precious metals," Gero wrote in a market note.
Spot silver rose 0.8 percent at $16.72 an ounce after
matching the previous session's five-week low of $16.54. It fell
3.7 percent on Friday in its biggest one-day decline since
December 2016.
Platinum was flat at $986.24 an ounce, still hovering
near a three-week low, while palladium dropped 1.5
percent to $1,031.20.
(Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by Louise Heavens and Lisa Von Ahn)